Section 6: Relief for First-Time Buyers
Summary
1.Section 6 provides a stamp duty land tax (SDLT) relief for purchases of residential property where the chargeable consideration is more than £125,000 but not more than £250,000 and the purchaser is a first-time buyer. The relief applies where the effective date of the transaction is on or after 25 March 2010 and before 25 March 2012.
Details of the Section
2.Subsection (2) introduces a new section 57AA into Part 4 of the Finance Act (FA) 2003.
3.New section 57AA(1) exempts an acquisition of residential property from a charge to SDLT on a freehold purchase or lease premium where the chargeable consideration (excluding rent) is more than £125,000 but not more than £250,000, the purchaser (or each of them) is a first-time buyer who intends to occupy the property as his or her only or main residence and the transaction is not one of a number of linked transactions.
4.New section 57AA(2)(a) and (b) define a “first-time buyer” as a person who has not previously acquired freehold or leasehold residential property in the UK, or its equivalent elsewhere in the world. Subsection (2)(c) and (d) apply an equivalent rule where a person has previously purchased property under alternative finance arrangements (under which a property is purchased by a financial institution, or jointly by a financial institution and a person).
5.New section 57AA(3) excludes from the conditions for relief grants or assignments of leases with less than 21 years to run. This ensures that a purchaser will not be denied relief because he or she has previously taken a short lease on a property.
6.New section 57AA(4) modifies the restriction on linked transactions. This ensures that relief will be available in cases where, for example, a purchase of a house or flat is accompanied by a separate lease of a garage in a block.
7.Subsection (3) inserts a new section 73CA into FA 2003 which allows the relief to apply to a purchase under alternative finance arrangements where the property is purchased by a financial institution, or jointly by a financial institution and a person, where the person is a first-time buyer.
8.Subsection (4) provides that regulations made by the Treasury under section 109 of FA 2003 are subject to negative resolution unless they amend the terms of the first-time buyers’ relief in a way which increases any person’s liability to tax.
9.Subsection (5) provides that first-time buyers’ relief is available for purchases under a shared ownership lease or shared ownership trust only where the purchaser elects to be taxed on a market value basis and the market value is more than £125,000 but not more than £250,000.
10.Subsection (6) provides for the relief to apply where the effective date of the transaction is on or after 25 March 2010 but before 25 March 2012.
Background Note
11.SDLT is a tax on land transactions. Purchasers are charged a percentage of the consideration they pay for an interest in land. Currently, the percentage can be 0, 1, 3 or 4 per cent depending on the amount of consideration.
12.At present, the 0 per cent band applies to purchases of residential property at up to £125,000. The effect of this relief is to extend the 0 per cent band to purchases of residential property at up to £250,000 where the purchaser or purchasers are first-time buyers.
13.The relief is time-limited to two years.
